Policy Research Working Paper | Law_and_Development | World Bank

The impacts of public hospital autonomization : evidence from a quasi-natural experiment

2012-07-17T04:00:00.000Z

This paper exploits the staggered rollout of Vietnams hospital autonomization policy to estimate its impacts on several key health sector outcomes including hospital efficiency, use of hospital care, and out-of-pocket spending. The authors use six years of panel data covering all Vietnams public hospitals, and three stacked cross-sections of household data. Autonomization probably led to more hospital admissions and outpatient department visits, although the effects are not large. It did not, however, affect bed stocks or bed-occupancy rates. Nor did it increase hospital efficiency. Oddly, despite the volume effects and the unchanged cost structure, the analysis does not find any evidence of autonomization leading to higher total costs. It does, however, find some evidence that autonomization led to higher out-of-pocket spending on hospital care, and higher spending per treatment episode; the effects vary in size depending on the data source and hospital type, but some are quite large -- around 20 percent. Autonomy did not apparently affect in-hospital death rates or complications, but in lower-level hospitals it did lead to more intensive style of care, with more lab tests and imaging per case.

Promoting intellectual property monetization in developing countries : a review of issues and strategies to support knowledge-driven growth

2012-07-24T04:00:00.000Z

This paper outlines and evaluates several intellectual property monetization strategies available to patent holders in developing countries that help generate domestic innovation and knowledge-driven growth by promoting more active technology markets. Based on a review of World Intellectual Property Report indicators, the patent ownership gap between a sample of developed and developing countries has narrowed gradually for more technologically-sophisticated developing countries. However, based on complementary International Monetary Fund Balance of Payments data, the patent commercialization divide (as indicated by licensing income) has been widening. The paper argues that patents, and all forms of intellectual property, are an enabling mechanism rather than a defensive right: an intangible asset class that can be proactively nurtured and managed for greater value extraction to stimulate knowledge-based entrepreneurship and growth in developing countries. The paper presents multiple case studies of alternative monetization strategies to address the commercialization divide. These strategies range from private, market-driven options to those requiring a greater amount of public policy support: from patent securitization and patent exchanges (focusing on the United States-initiated Intellectual Property Exchange International and the Shanghai Silicon Intellectual Property Exchange), to the strengthening of technology transfer and commercialization infrastructure (focusing on the experience of the Association of University Technology Managers and Taiwan, China's Intellectual Property Rights Institute), to patent litigation support (including South Korea's support of patent infringement lawsuit costs for small and medium enterprises). The paper also highlights areas where further policy research would be helpful.

Unlocking Bangladesh-India trade : emerging potential and the way forward

2012-08-01T04:00:00.000Z

The primary objective of this study is to analyze the impact on Bangladesh of increased market access in India, both within a static production structure and also identifying dynamic gains. The study shows that Bangladesh and India would both gain by opening up their markets to each other. Indian investments in Bangladesh will be very important for the latter to ramp up its exports, including products that would broaden trade complementarity and enhance intra-industry trade, and improve its trade standards and trade-handling capacity. A bilateral Free Trade Agreement would lift Bangladesh's exports to India by 182 percent, and nearly 300 percent if transaction costs were also reduced through improved connectivity. These numbers, based on existing trade patterns, represent a lower bound of the potential increase in Bangladesh's exports arising from a Free Trade Agreement. A Free Trade Agreement would also raise India's exports to Bangladesh. India's provision of duty-free access for all Bangladeshi products (already done) could increase the latter's exports to India by 134 percent. In helping Bangladesh's economy to grow, India would stimulate economic activity in its own eastern and north-eastern states. Challenges exist, however, including non-tariff measures/barriers in both countries, excessive bureaucracy, weak trade facilitation, and customs inefficiencies. Trade in education and health care services offers valuable prospects, but also suffers from market access issues. To enable larger gains, Bangladesh-India cooperation should go beyond goods trade and include investment, finance, services trade, trade facilitation, and technology transfer, and be placed within the context of regional cooperation.

Protection in good and bad times ? the Turkish green card health program

2012-08-22T04:00:00.000Z

This paper evaluates the equity and financial protection implications of the expansion of the Green Card (Yesil Kart) non-contributory health insurance program in Turkey during the growth years from 2003 to 2008. It also considers the program's protective impact during the economic crisis in 2009. The authors find that the rapid expansion of the program between 2003 and 2008 was highly progressive. It led to significant gains in coverage of the poor but offered limited financial protection as out-of-pocket expenditures even before the introduction of the program had been limited. Using a specialized welfare monitoring survey, fielded in 2009, the authors estimate the impact of the program on household level health care utilization during the first phase of the economic slowdown in Turkey. Using three different estimation techniques, they find that the Green Card program had a significantly positive impact on protecting health care utilization during the crisis.

Antidumping and market competition: implications for emerging economies

2012-09-12T04:00:00.000Z

While the original justification of the antidumping laws in the industrial economies was to protect domestic consumers against predation by foreign suppliers, by the early 1990s the laws and their use had evolved so much that the opposite concern arose. Rather than attacking anti-competitive behavior, dumping complaints by domestic firms were being used to facilitate collusion among suppliers and enforce cartel arrangements. This paper examines the predation and anti-competitiveness issues from the perspective of the "new users" of antidumping -- the major emerging economies for which antidumping is now a major tool in the trade policy arsenal. The paper examines these concerns in light of important ways in which the world economy and international trading system have been changing since the early 1990s, including more firms and more countries participating in international trade, but also more extensive links among suppliers and consumers through multinational firm activity and vertical specialization.

Bancassurance -- a valuable tool for developing insurance in emerging markets

2012-09-12T04:00:00.000Z

Bancassurance is the process of using a bank's customer relationships to sell life and non-life insurance products. In some developed countries it has had a dramatic impact on developing sales volumes, attaining market shares in excess of 50 percent in life and more than 10 percent in non-life. By contrast, in other developed countries it has had much lower impact. Its strategic benefits to developing countries are wide ranging. This paper discusses the potential of Bancassurance to contribute to the growth and the stability that both life and non-life insurance products can bring to developing countries. The details of how some approaches work better than others, and how regulation and consumer protection issues can impact such development, are reviewed here, together with a discussion of regulatory policy issues and recommendations for best practice. The paper provides a detailed study of the operation of Bancassurance in a major developed market (France). This is contrasted with a further study in a developing market (Mexico). A short summary draws together the key implications for developing countries.

There goes gravity : how eBay reduces trade costs

2012-10-25T04:00:00.000Z

This paper compares the impact of distance, a standard proxy for trade costs, on eBay and offline international trade flows. It considers the same set of 62 countries and the same basket of goods for both types of transactions, and finds the effect of distance to be on average 65 percent smaller on the eBay online platform than offline. Using interaction variables, this difference is explained by a reduction of information and trust frictions enabled through online technology. The analysis estimates the welfare gains from a reduction in offline frictions to the level prevailing online at 29 percent on average. Remote countries that are little known, with weak institutions, high levels of income inequality, inefficient ports, and little internet penetration benefit the most, as online markets help overcome government and offline market failures.

Visualizing Uncertainties, or how Albert Hirschman and the World Bank disagreed on project appraisal and development approaches

2012-11-06T05:00:00.000Z

Since its birth in 1944, the World Bank has had a strong focus on development projects. Yet, it did not have a project evaluation unit until the early 1970s. An early attempt to conceptualize project appraisal had been made in the 1960s by Albert Hirschman, whose undertaking raised high expectations at the Bank. Hirschman's conclusions -- published first in internal Bank reports and then, as a book in 1967 -- disappointed many at the Bank, primarily because they found it impractical. Hirschman wanted to offer the Bank a new vision by transforming the Bank's approach to project design, project management and project appraisal. What the Bank expected from Hirschman, HOWEVER, was not a revolution but an examination of the Bank's projects and advice on how to make project design and management more measurable, controllable, and suitable for replication. The history of this failed collaboration provides useful insights on the unstable equilibrium between operations and evaluation within the Bank. In addition, it shows that the Bank actively participated in the development economics debates of the 1960s. This should be of interest for development economists today who reflect on the future of their discipline emphasizing the need for a non-dogmatic approach to development. It should also be of interest for the Bank itself, which is stressing the importance of evaluation for effective development policies. The history of the practice of development economics, using archival material, can bring new perspectives and help better understand the evolution of this discipline.

Import protection, business cycles, and exchange rates : evidence from the great recession

2012-12-11T05:00:00.000Z

This research estimates the impact of macroeconomic fluctuations on import protection policies over 1988:Q1-2010:Q4 for five industrialized economies -- the United States, European Union, Australia, Canada and South Korea. There is evidence of a strong countercyclical trade policy response in the pre-Great Recession period of 1988:Q1-2008:Q3 during which increases in domestic unemployment rates, real appreciations in bilateral exchange rates, and declines in the GDP growth rates of bilateral trading partners led to substantial increases in new temporary trade barriers. It then applies this pre-Great Recession empirical model to realized macroeconomic data from 2008:Q4-2010:Q4 and find it predicts a surge of new import protection during the Great Recession -- e.g., for the US and EU, the model predicts new trade barriers would cover an additional 15 percentage points of nonoil imports, well above the baseline level of 2-3 percent of import coverage immediately preceding the crisis. Finally, the research examines why the realized trade policy response differed from model predictions. While exchange rate movements played an important role in limiting new import protection during the Great Recession, there is also evidence of one particularly important change in trade policy responsiveness; i.e., in this period, governments refrained from imposing new temporary trade barriers against foreign trading partners experiencing their own weak or negative economic growth.

Insurance risk transfer and categorization of reinsurance contracts

2012-12-27T05:00:00.000Z

Despite the existence of numerous quantitative approaches to the categorization of financial reinsurance contracts, often insurance regulators may find the practical implementation of the task to be technically challenging. This research paper develops a simple, affordable, and robust regulatory method that can help insurance regulators to categorize financial reinsurance contracts as reinsurance or financial instruments. By reviewing real examples of different categorization methods, this paper explains how the proposed method standardizes such categorization. It also summarizes the existing pertinent literature on the subject with the view to helping insurance regulators to first apply some simple indicators to flag the main issues with financial reinsurance contracts that may need further reviews. Having identified the suspicious reinsurance contracts, supervisors may consider several solutions provided by the authors and, in some cases, requiring further quantitative testing of risk transfer contracts for categorization purposes, supervisors may also consider adopting the Standardized Expected Reinsurer's Deficit approach to contract testing presented in this paper. The approach advocates the use of a simple standardized stochastic method that would allow market participants and regulators to perform robust quantitative tests quickly and at an affordable cost. Besides addressing the obvious drawbacks of the "10-10" test, the proposed alternative method allows a great reduction in the technical challenges posed to the users of the Expected Reinsurer's Deficit approach based on full stochastic models with only a minimum loss of predictive accuracy.

Reinsurance as capital optimization tool under Solvency II

2013-01-07T05:00:00.000Z

This paper compares solvency capital requirements under Solvency I and Solvency II for a sample mid-size insurance portfolio. According to the results of a study, changing the solvency capital regime from Solvency I to Solvency II will lead to a substantial additional solvency capital requirement that might represent a heavy burden for the company's shareholders. One way to reduce the capital requirement under Solvency II is to increase reinsurance protection, which will reduce the net retained risk exposure and hence also the solvency capital requirement. Therefore, this paper proposes an extended reinsurance structure that, under Solvency II, brings the capital requirement back to the level of that required under Solvency I. In a step-by-step approach, the paper demonstrates the extent of solvency relief attained by the insurer by applying different possible adjustments in the reinsurance structure. To evaluate the efficiency of reinsurance as the solvency capital relief instrument, the authors introduce a cost-of-capital based approach, which puts the achieved capital relief in relation to the costs of extending the reinsurance protection. This approach allows a direct comparison of reinsurance as a capital relief instrument with debt instruments available in the capital market. With the help of the introduced approach, the authors show that the best capital relief efficiency under all examined reinsurance alternatives is achieved when a financial quota share contract is chosen for proportional reinsurance.

Trade costs in the developing world : 1995 - 2010

2013-01-08T05:00:00.000Z

The authors use newly collected data on trade and production in 178 countries to infer estimates of trade costs in agriculture and manufactured goods for the 1995-2010 period. The data show that trade costs are strongly declining in per capita income. Moreover, the rate of change of trade costs is largely unfavorable to the developing world: trade costs are falling noticeably faster in developed countries than in developing ones, which serves to increase the relative isolation of the latter. In particular, Sub-Saharan African countries and low-income countries remain subject to very high levels of trade costs. In terms of policy implications, the analysis finds that maritime transport connectivity and logistics performance are very important determinants of bilateral trade costs: in some specifications, their combined effect is comparable to that of geographical distance. Traditional and non-traditional trade policies more generally, including market entry barriers and regional integration agreements, play a significant role in shaping the trade costs landscape.

The impact of health insurance schemes for the informal sector in low- and middle-income countries : a systematic review

2013-01-17T05:00:00.000Z

This paper summarizes the literature on the impact of state subsidized or social health insurance schemes that have been offered, mostly on a voluntary basis, to the informal sector in low- and middle-income countries. A substantial number of papers provide estimations of average treatment on the treated effect for insured persons. The authors summarize papers that correct for the problem of self-selection into insurance and papers that estimate the average intention to treat effect. Summarizing the literature was difficult because of the lack of (1) uniformity in the use of meaningful definitions of outcomes that indicate welfare improvements and (2) clarity in the consideration of selection issues. They find the uptake of insurance schemes, in many cases, to be less than expected. In general, we find no strong evidence of an impact on utilization, protection from financial risk, and health status. However, a few insurance schemes afford significant protection from high levels of out-of-pocket expenditures. In these cases, however, the impact on the poor is weaker. More information is needed to understand the reasons for low enrollment and to explain the limited impact of health insurance among the insured.

Trade policy flexibilities and Turkey : tariffs, antidumping, safeguards, and WTO dispute settlement

2013-01-17T05:00:00.000Z

Trade policy commitments to lower import tariffs and to maintain tariffs at low levels entail short and long-run political-economic costs and benefits. Empirical work examining the relationship between such commitments and the exercise of trade policy flexibilities is still relatively nascent, especially for emerging economies. This paper provides a rich, empirically-based assessment of ways that Turkey exercised trade policy flexibilities during the global economic crisis of 2008-11. First, and despite multilateral and customs union commitments that might limit changes to applied tariffs, Turkey made changes to both its applied Most Favored Nation and preferential tariffs that cumulatively affect nearly 9 percent of manufacturing imports and 10 percent of import product lines. Second, Turkey's cumulative application of temporary trade barrier (TTB) policies -- antidumping, safeguards and countervailing duties -- are estimated to impact by 2011 an additional 4 percent of imports and 6 percent of product lines. Other surprising results on Turkey's use of flexibilities include: extending the duration of previously imposed antidumping and safeguards beyond expected removal dates, removing one TTB policy over a set of products and immediately reapplying a different TTB policy, covering lengthy upstream and downstream segments of important industries, and deepening discriminatory preference margins already inherent in existing preferential trade agreements.

Integrating gravity: the role of scale invariance in gravity models of spatial interactions and trade

2013-01-31T05:00:00.000Z

This paper revisits the ubiquitous bi-proportional gravity model and investigates the reasons why different theoretical frameworks may lead to the same empirical formula. The generic gravity equation possesses scale invariance symmetries that constrain possible theoretical explanations based on optimal allocation principles, such as neoclassical or probabilistic frameworks. These constraints imply that a representative consumer's utilities must be separable, and that an entropy model is the only consistent maximum likelihood allocation of a matrix of flows between origin and destination. The paper explores the feasibility of wider classes of non-scale invariant gravity equations, where gravity is no longer bi-proportional by including nonlinear interactions between trade costs and fundamental country factors such as economic size. It shows that such extensions are feasible but that they do not result in a significant improvement in the explanatory power of the empirical analysis.

Using administrative data to evaluate municipal reforms : an evaluation of the impact of Minas Facil Expresso

2013-02-21T05:00:00.000Z

Efforts to make it easier for firms to register formally are the most common form of business regulatory reform over the past decade. While there is evidence that large reforms have resulted in some increases in registration rates, recent experimental evidence suggests very few informal firms choose to register when given information about how to do so. This raises the question of whether it is productive for governments to continue to extend simplification efforts to all firms, especially those in more remote areas where many of the benefits of registering may be reduced. This study uses administrative data to evaluate the impact of Minas Facil Expresso, a program in the state of Minas Gerais, Brazil, which attempted to expand a business start-up simplification program to more remote municipalities. Using difference-in-differences with 56 months of registration data for 822 municipalities, the analysis finds introducing these units actually led to a reduction in registration rates, and no change in tax revenues. The paper uses this evaluation to illustrate the design choices and issues involved in using administrative data to evaluate reforms, with the goal of also providing a template that can be used for evaluating similar reforms elsewhere.

American politics, the presidency of the World Bank, and development policy

2013-03-04T05:00:00.000Z

The World Bank's president has been an American by tradition. Yet little work has explored the consequences for this connection in influencing visions of development in the organization across time. This paper uses evidence from archives, congressional hearing records, and memoirs and histories of World Bank presidents to investigate United States-World Bank relations and development policy during four presidencies--Eugene Meyer, Eugene Black, Robert McNamara, and James Wolfensohn. The author argues that at times the political arrangements had the effect of pushing the Bank toward greater institutional independence from the United States, particularly when partisanship in American politics rose and new United States presidential administrations came into office with the World Bank president's term holding over from before. At other times, United States-World Bank connections pulled the Bank into foreign policy issues in the United States that the Bank might not otherwise have addressed when advocates pressed their case on Capitol Hill.

How different are safeguards from antidumping ? evidence from us trade policies toward steel

2013-03-04T05:00:00.000Z

Use of temporary trade barriers has proliferated across countries, industries, and even policy instruments. This paper constructs a panel of bilateral, product-level United States steel imports that are matched to a unique data set on trade policy exclusions that are associated with the 2002 United States steel safeguard in order to compare the trade impacts that result from application of various temporary trade barrier policies over 1989-2003. The analysis finds that the trade effects of an applied safeguard -- which is statutorily expected to follow the principle of nondiscriminatory treatment -- can nevertheless compare closely with the application of the explicitly discriminatory antidumping policy. The results on trade policy substitutability complement other recent research on these increasingly important forms of import protection.

Chinese firms' entry to export markets : the role of foreign export spillovers

2013-04-04T04:00:00.000Z

In this paper, the effect of proximity to multinational exporters on the creation of new export linkages (the extensive margin of trade) is debated. Using panel data from Chinese customs for 1997-2007, the capacity for Chinese domestic firms to begin exporting new varieties to new markets is shown to respond positively to the export activity of neighboring foreign firms. These spillovers are shown to be product and country specific. This conclusion is robust to fixed effects and instrumental variable specifications that control for both supply and demand shocks that could bias the estimations. The impact is sizable. The marginal impact of product-country-specific foreign export spillovers is five times as large as the effect of a 10 percent increase in the demand for the product in the destination country. Foreign export spillovers are also shown to be primarily limited to ordinary trade activities. Overall, our findings suggest that even for a country with an important cost-advantage such as China, there is room for initiatives from policy-makers that will diffuse best practices regarding export experience among exporters.

Trade policy barriers: an obstacle to export diversification in Eurasia

2013-05-03T04:00:00.000Z

Despite trade liberalization efforts made by Eurasian countries, the export structure of the region shows significant levels of concentration across export destinations. To shed light on this observation, this research analyzes trade policy barriers in Eurasia, East Asia and the Pacific, and the European Union. Using the most recent data from sources including the World Trade Organization, the United Nations, and the World Bank including the Overall Trade Restrictiveness Indices, the Services Trade Restrictions Database, and the Temporary Trade Barriers Database the role of tariffs, non-tariff measures, temporary trade barriers, trade agreements, and trade barriers in services are explored to explain the lack of diversification by destination. Several conclusions can be drawn from the analysis. First, China, Korea, and Japan, as well as the European Union, impose high levels of protection on products of animal origin, which may explain the lack of Eurasian export diversification toward the East Asia and the Pacific and the European Union regions. It also highlights the potential benefits of diversifying the structure of production in Eurasia toward more sophisticated and technologically intensive goods. Second, the East Asia and the Pacific region (especially China) appears to be more protectionist than the European Union, suggesting a greater challenge for Eurasian countries in diversifying exports to the destination. And third, few or no regional trade agreements exist between Eurasian countries and countries in the European Union or East Asia and the Pacific.